Before the Supreme Court of India AIR 1963 SC 1572 Petitioner Dr. Vimla Respondent Delhi Administration Date of Judgement 29th November, 1962 Bench Hon'ble Justice K. Subba Rao; Hon'ble Justice S.J. Imam; Hon'ble Justice N. Rajagopala Ayyangar; Hon'ble Justice R. Mudholkar
Introduction
The words ‘Dishonestly’ and ‘Fraudulently’ might look similar to a common man and we might be using these words interchangeably without knowing their actual meaning. In Criminal Law, both these words have very different meanings and thus cannot be used interchangeably. The Supreme Court of India has elaborated on their meaning and also answered important legal questions arising out of their meaning in the case of Dr. Vimla v. Delhi Administration.[1] The Supreme Court relied upon various authors and case laws including foreign judgments to decide this case and lay down the essential ingredients of ‘Fraud.’
Background:
The words ‘Dishonestly’ and Fraudulently’ are defined in Section 24 and Section 25 of the Indian Penal Code, 1860 respectively. Various courts have faced problems while deciding what the elements of fraud are. The major question before the Courts was whether only economic loss constitutes part of it and whether the economic loss to one and gain to another should both be present at the same time. Justice Mookerjee in Surendra Nath Ghose v. Emperor,[2]held that, “The expression, “intent to defraud” implies conduct coupled with the intention to deceive and thereby to injury in other words, “defraud” involves two conceptions, namely, deceit and injury to the person deceived, that is, infringement of some legal right possessed by him, but not necessarily deprivation of property.”
International Background-
Sir Stephen in his book A History of Criminal Law of England[3] defined ‘Fraud’ as a mix of two ingredients, deceit, and injury. The author took a narrow view that injury to another person is a necessary ingredient of fraud. This view was expanded by the Court of Criminal Appeal in R v. Welhant,[4]held that defraud is to “deprive by deceit.” Justice Hilbery said that loss need not be necessarily an economic loss. The intention to deceive is what matters and in most cases, such an intention would cause economic loss. It means a loss to another person is not necessary and it is the intention which matters.
Statutory Provisions Discussed:
a. Section 24 of Indian Penal Code, 1860.
b. Section 44 of Indian Penal Code, 1860.
c. Section 463 of Indian Penal Code, 1860.
d. Section 464 of Indian Penal Code, 1860.
e. Section 467 of Indian Penal Code, 1860.
f. Section 468 of Indian Penal Code, 1860.
Facts of the Case:
Procedural History-
The magistrate took trial under Section 120-B, 419, 467, 468 of Indian Penal Code, 1860. The magistrate after considering various facts and circumstances acquitted Dr. Vimla and Her husband. The State preferred an appeal against the order of the magistrate, High Court acquitted Dr. Vimla’s husband but sentenced Dr. Vimla under Section 467,468 of Indian Penal Code, 1860. Dr. Vimla preferred Special Leave to Appeal before the Supreme Court to get her conviction set aside.
Factual matrix-
Appellant purchased an Austin Power Car from Dewan Ram Swarup on January 20, 1953. The car was purchased by Vimla in the name of her minor daughter Nalini who was 6 months old at that time. Car was transferred to Nalini’s name and the insurance policy of the car was also transferred in the name of Nalini. The Appellant signed on the insurance policy as Nalini. Thereafter two claims were also made and the Appellant signed the claim forms and payment receipts as Nalini. The insurance company made a complaint that the Appellant and her husband had made ‘Fraud.’
Issues:
1. Whether the Appellant is guilty of an offense under Section 463, 464 of Indian Penal Code?
2. Whether an advantage secured to deceiver without a corresponding loss to the deceived would amount to fraud?
Arguments Advanced:
The Appellants contended that the Appellant has not signed the requisite forms fraudulently. They also contended that the Appellant did not intend to cause any injury to the insurance company. They also contended that the insurance company would not have acted differently even the car would have been in name of the Appellant. The company has not suffered any pecuniary or economic loss as the claims of the accident made were genuine.
Judgment:
The judgment of Court was delivered by Justice K. Subba Rao. The Court after considering the various facts and law held that the Appellant is not guilty under Section 467, 468 of Indian Penal Code, 1860. The Court was of the view that the insurance company has not suffered any loss and neither the Appellant has gained any advantage by signing as Nalini. The intention of the Appellant was not to harm the insurance company. The claims made by the Appellant were also genuine and it would have made no difference if the car would have been registered in the name of the Appellant or any other person.
Ratio Decidendi-
The Court was considering the question of whether the loss to another person is a necessary condition to constitute fraud. The Court after relying upon various authors, foreign case laws and Indian Judgments held that “the expression “defraud” involves two elements, namely, deceit and injury to the person deceived. Injury is something other than the economic loss that is’, deprivation of property, whether movable or immovable, or of money, and it will include any harm whatever caused to any person in body, mind, reputation or such others. In short, it is a non-economic or non- pecuniary loss. A benefit or advantage to the deceiver will almost always cause loss or detriment to the deceived. Even in those rare cases where there is a benefit or advantage to the deceiver, but no corresponding loss to the deceived, the second condition is satisfied.”
Conclusion:
The Supreme Court clarified that there can be fraud even if there is no loss to the person deceived. Injury has been taken in its broader sense as defined under Section 44 of the Indian Penal Code. The Court held that if the person intended to deceive the other person, then it would be fraud despite the fact that such injury is caused or not. It was the reason that Court acquitted Dr. Vimla because she never intended to cause harm to the insurance company. She did wrong by buying the care as Nalini but she might have done for income-tax or some other reasons, which the Court said is not an issue in the present case. This decision still holds good and has been relied upon in many cases by all Courts across Indian including Supreme Court.
Edited by Parul Soni
Approved & Published – Sakshi Raje
Reference
[1] Dr. Vimla v. Delhi Administration, AIR 1963 SC 1572.
[2] Surendra Nath Ghose v. Emperor, (1911) 38 ILR 75 (Cal).
[3] 2 James Fitzjames Stephen, A History of Criminal Law of England, 121, (1883), Wentworth Press
[4] R v. Welhant, (1960) 1 All ER 260.
